Last week, I travelled to Sydney to attend the Australian's Competitive Advantage Forum held in partnership with BHP held at the ivy.
The theme of this year's forum was "Should companies require a social licence to operate?" The forum explored how businesses can meet consumer demands around tangible proof of their corporate sustainability policies.
The panel was moderated by Chris Kenny and featured Michael Coleman (Chair of Audit Committee of Australian Institute of Company Directors), John Colvin (CEO & Managing Director of Australian Institute of Company Directors), Alison Kitchen (Chair of KPMG) and Sam Mostyn (Chair of Citibank Australia).
It was great to hear a lot of the thoughts and ideals of Strategic Sustainability Consultants echoed by the panel members.
The main instance of corporate sustainability gone wrong, which was brought up time and time again throughout the conference was the Royal Commission into Financial Services. One of the primary issues around corporate sustainability which was raised was consumer trust.
Issues around the Royal Commission were brought up with panel members concerned that companies have been acting in the best interest of their shareholders but politicians are now judging them through a political lens and consumers through a community lens. This, I would argue, is why we need a change in how we conduct business. Community and political expectations of business have changed and while businesses must still be profitable and economically sustainable in order to operate, they must also ensure they are contributing positively to the society and environment in which they operate. It is also important to note that the shareholders are also wanting to see this shift.
Alison Kitchen argued that during the HIH Royal Commission in 2003, the Commissioner pleaded with companies to "...do the right thing." Ms Kitchen argued that now 15 years on, we shouldn't be surprised at consumers' request for a social licence because companies are still not doing the 'right thing' by consumers after the findings from the Royal Commission into Financial Services.
It was discussed that while Australia has seen an incredible 27-year period of economic growth, only 5% reported to be happy with this growth according to a CEDA report, answering the age old question of whether or not money can truly buy you happiness. In addition to this, 40% of Australians reported they believed corporates and top executives were the main beneficiaries of this growth. For some panel members, this indicated that corporates need to be doing more than just making money.
And companies are doing this. On the Australian Institute of Company Directors website, there is only one hit for the term 'profitability'. But when it comes to terms around social and environmental sustainability, there are multiple hits. More and more, businesses are starting to prioritise social and environmental sustainability.
Sam Mostyn brought up the idea of CEO's as activists and advocates by referencing an Edelman study which showed that 80% of Australian employees look to the head of their company to step up on social and environmental issues. Alan Joyce's leadership on same sex marriage last year was discussed with acknowledgement that while Qantas may have lost businesses, the company gained respect from many people in the community, and it was the right thing to do in the company.
Ms Mostyn also discussed the importance of millennials in this agenda. By 2020, 50% of the workforce will be made up of millennials, and this is the generation which wants companies to take action on social and environmental issues. Ms Mostyn argued that for a company's own sustainability, it is important to take this idea of a social licence seriously for the next generation of workers and consumers. This was further concerning by the fact I was one of the only, if not the sole millennial in the room of 150 of Australia's leading company directors and executives.
Ideas around impact investing, social media and effective communication by all means were also raised by panel members.
At the end of the discussion, I had the chance to ask a question of the panel.
"Small businesses account for 97.4% of businesses in Australia. When it comes to value added to the economy, small-to-medium sized enterprises or SMEs account for 56%. What role do you see these SMEs playing in the development of an economically, socially and environmentally sustainable future, most notably in relation to the United Nations' Global Goals for Sustainable Development? What incentives should be put in place for these businesses?"
Ms Mostyn took my question, which had a lot of the panel stumped. Ms Mostyn brought up the importance of the supply chain and the importance of large companies taking leadership and setting the tone for smaller organisations in Australia. However, Ms Mostyn agreed with me that a lot of expectations are put on smaller organisations which do not have the resources that large corporates do to develop meaningful commitments to social and environmental sustainability.
Overall, it was a fantastic experience to discuss these ideas with fellow attendees and a few of the panel members after the forum had concluded.
If you have any further questions about any of the discussion points raised, please contact a member of the Strategic Sustainability Consultants team for more information!